The Hong Kong government is stepping towards making licensing local crypto exchanges mandatory, which will only be allowed to offer services to professional investors.
The financial market’s regulator of the autonomous administrative regions already floated the idea last year and was seeking industry consultation on the proposal but now the consultation period has expired.
In a notice published on Friday, Hong Kong’s Financial Services and the Treasury Bureau (FSTB) stated that the consultation concluded that all cryptocurrency exchanges operating within its jurisdictions should be licensed.
Currently, crypto exchanges can ‘opt-in’ to become a licensed entity in Hong Kong. If the proposals are turned into laws, the jurisdiction’s financial regulator will have more power over the crypto industry.
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“The requirement of confining the services of a VA exchange to professional investors only is necessary to ensure a proper degree of protection for the investing public,” the 32-page consultation conclusion paper noted.
To qualify as a professional investor in Hong Kong, any investor needs to have a portfolio of HK$8 million (around $1.03 million). This requirement will exclude a major portion of the crypto investors.
Earlier, an advocacy group of Hong Kong’s cryptocurrency exchanges challenged the proposed regulations and warned that any such order would further push retail crypto investors towards unregulated platforms.
Asia vs Crypto
However, Hong Kong is not the only Asian jurisdiction to come up with such proposals. Earlier, Thailand proposed similar rules that would have excluded a massive chunk of retail traders from crypto markets, but public backlash forced the government to withdraw the proposal.
China is popular for its anti-stance towards cryptocurrencies as the country has banned all crypto-related transactions deeming them illegal. Furthermore, India is expected to ban cryptocurrency trading within its jurisdiction. On the other hand, Singapore requires crypto exchanges to be licensed but allows retail services.